A Profit Center Is

question 25

Multiple Choice

A profit center is

• A) a responsibility center that always reports a profit.
• B) a responsibility center that incurs costs and generates revenues.
• C) evaluated by the rate of return earned on the investment allocated to the center.
• D) referred to as a loss center when operations do not meet the company's objectives.

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Definitions:

ROE

Stands for Return on Equity, a financial ratio that measures the profitability of a company in relation to shareholders' equity.

Dividend Growth Rate

The annualized percentage rate of growth of a company's dividend payouts, indicating the company's long-term earnings growth potential and financial health.

Earnings

Net income of a business entity over a set time frame, indicating its financial performance.

Dividends

Distributions from a company's earnings to its shareholders, typically originating from the firm's profits.